At most, the system seemed to be in need of nothing more than minor tinkering. Thoughts of increasing the pensions paid under the Canada/Quebec Pension Plan (C/QPP) were shelved indefinitely and the focus shifted to developing a new, voluntary retirement savings vehicle: Pooled Registered Pension Plans (PRPPs).

Two years later, the federal government stunned many pension observers by announcing it will reconsider expanding the Canada/Quebec Pension Plan after all. Various options for expansion will be discussed by the finance ministers in June. So what happened? In 2010, Alberta and Quebec were both opposed to expanding the C/QPP with only Ontario keen to proceed. The recent election of a pro-labour government in Quebec, however, eliminated Quebec’s opposition and was enough to tip the scales in favour of revisiting “Big C/QPP.” In the meantime, Ontario’s conspicuous lack of enthusiasm for PRPPs seems to have infected the other provinces, which are now dragging their heels after an early show of enthusiasm. On the surface, Big C/QPP seems a no-brainer. A pension equal to 25% of the average wage – which is what the C/QPP currently provides – is obviously not enough for middle-income households, even if you add in OAS. Surely it would be a good thing for all working Canadians to have bigger pensions, especially given that the coverage ratio within private pension plan is down to only 21% (yes, 21%) in the private sector. But when we take a closer look, the case for a bigger C/QPP is questionable at best, and if it is implemented poorly it can be a disaster. Here are five reasons why we should want to take it slow.

1. We don’t have a retirement crisis in spite of perceptions to the contrary, and none will develop for many years to come. The poverty rate among seniors is very low in absolute terms, less than half that of Canadians aged 18-64. An expanded C/QPP therefore starts to resemble a solution looking for a problem. The news is better than most of us realize. Nearly half of recent retirees have enough retirement income to replace more than 115% of their regular pre-retirement consumption.

2. The real looming problem in Canada is the rising cost of health care. We are already paying about $200-billion a year for health care and that is expected to rise by another 50% in real terms over the next 20 years. This is a serious problem because it will crowd out program spending for education and pensions. The rising healthcare bill will inevitably lead to higher taxes or user fees. Before we decide we’re ready to absorb higher C/QPP costs we should look more closely at where health costs are likely to end up.

3. We risk phasing in any improvements to the Canada/Quebec Pension Plan too quickly. This is what we did in 1966 when we provided a full C/QPP benefit after only 10 years of contributing a miniscule 3.6% of covered earnings and we are still paying the price today. The long-term cost of the Canada Pension Plan today is about 9.9% of covered earnings (it is about 11.2% in Quebec) though it should be closer to 6%. We are paying so much more because the previous generation didn’t pay enough into the C/QPP in its early years, leaving an unfunded liability that has to be amortized. If labour had its way, we would do the same thing again. The Canadian Labour Congress proposes a “small premium increase” to phase in a doubling of the CPP in just seven years. The fact is, the required contributions — employer and employee combined — would eventually have to climb to at least 16% of pay and possibly to over 20% if this doubling of the CPP is implemented retroactively. The quicker the phase-in the higher the ultimate cost. The situation is worse than it was in 1966-1976 because this time the 55-65 age group is so much larger. Quick phase-in means the next generation will be paying much more for their expanded C/QPP pension than it is worth. As if young people didn’t have enough reasons to resent the older generation!

4. An expanded CPP would enable us to continue to retire fairly early — the current average retirement age is 62 — and maybe even earlier. While this seems like a good thing, the worker to retiree ratio is dropping and will eventually fall from the present 4.4 to 1 to an estimated 2.3 to 1 by 2036. As this happens, we will need the 60-somethings to stay in the workforce longer to slow down this falling ratio. If we expand the C/QPP now so we can continue to retire early, employers and governments down the road will have find ways to reverse the effect in order to entice Canadians to do just the opposite. This is not exactly the most efficient strategy.

5. Fifth, expanding the C/QPP means we will be putting much more emphasis on just one pillar in our 3-pillar retirement system. One of the strengths of our current system (which ranks very highly internationally) is that Canadians get their retirement security from multiple sources. Indeed, we are praised by the OECD for the diversity of our sources of retirement income. An expanded C/QPP would induce us to contribute less to RRSPs and pension plans and increase our reliance on the government to provide for our retirement needs. This reliance is a little precarious. While we weathered the recent financial crisis much better than most countries, who is to say we won’t look more like Greece in 20 years?

If after all this, the consensus is that the C/QPP should be expanded, I would propose changes be phased in very gradually or better still, they should be implemented prospectively only (meaning no retroactive increases in benefits) so that we are paying for the increased pension we get rather than expecting our children to pay for it. Finally, we should use this opportunity to change the range of allowable retirement ages to anticipate when we expect we will be retiring in 20 to 30 years’ time. A quick survey of what is happening in social security systems around the globe suggests that a normal retirement age of 65 is becoming untenable.

Fred Vettese is chief actuary of Morneau Shepell and co-author of The Real Retirement, Why You Could Be Better Off Than You Think and How to Make That Happen.